Target Corp. is bringing back free delivery for the holidays - a strategy it hopes will give it an edge over Wal-Mart Stores Inc., which is eschewing special shipping offers and encouraging online shoppers to pick up items at brick-and-mortar stores.
Target.com will offer free shipping and returns on all items starting Nov. 1, an enticement to get shoppers to buy holiday gifts on the site, the Minneapolis-based company said on Thursday. At Walmart.com, customers who spend less than $50 will either have to pay for shipping or arrange to have their items sent for free to a physical store.
The diverging strategies highlight a dilemma facing retailers as more consumers go online. Offering free shipping is more costly than having customers come pick up items in stores, and the chains lose the opportunity to coax shoppers into making impulse buys while they’re there. But many people won’t make a purchase at all if they can’t get it shipped to their homes for free.
“Without free shipping, you lose a lot of customers,” said Brian Yarbrough, an analyst at Edward Jones & Co. “Retailers have been finding that the time when most people abandon their order online is when it shows the shipping charges at the end. That’s when they are most likely to just say, ‘I’m out.’"
Target shares rose 1.2 per cent to $77.18 in New York trading, while Wal-Mart fell 1.2 per cent to $57.24. For the year, Target is up about 1.7 per cent. Wal-Mart, meanwhile, has lost a third of its value, hurt in part by a weak profit forecast the retailer delivered earlier this month.
Best Buy
Hunting for free-delivery deals has become a common practice for holiday shoppers in recent years. Best Buy Co. is also offering free shipping on all orders this season. Amazon.com Inc., meanwhile, has a patchwork of shipping policies. Its Prime subscribers, for instance, get free shipping in exchange for a $99-a-year subscription. The company also waives shipping fees on some orders exceeding $35 and orders of certain smaller items, such as earplugs and mobile-phone accessories.
Target will be playing up its free-shipping policy in television commercials. It first offered the deal last Christmas, part of efforts to win back shoppers following its data breach in 2013. It also now ships items to more than 200 countries, including China and Brazil, though that comes with a fee. And Target is expanding its curbside pick-up to 121 stores from 20.
Hard Sell?
Like Wal-Mart, Target also offers regular in-store pick-up. But that approach hasn’t won over some customers. If a shopper has to walk all the way to the back of a store, and then wait 10 to 15 minutes, it’s not an appealing proposition, Yarbrough said. To address those concerns, Wal-Mart has been moving pick-up areas to the front of the store and adding signs to make them easier to find.
“As of last year, it was a very inconvenient and not smooth process,” Yarbrough said.
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